Can I invest a lumpsum in mutual funds whenever I have it?

I don't have a regular income. I want to invest a lumpsum in mutual funds once in two or three months. Here is what I have planned: I will select four or five schemes and divide the amount and invest it whenever I have, say, Rs 30,000 to Rs 50,000 in every three months. Is it a good idea or what are the risks here? Please guide me.
Why it is not a good idea to select some schemes and invest regularly whenever a scheme's NAV goes down? Can one do this instead of SIP?
--Vilas Sunagar

If you don't have a regular income, you may invest whenever you have the money. A Systematic Investment Plan (SIP) is a strategy that helps an investor to invest a regular sum at periodic intervals. Apart from the financial discipline, it also helps investors to average the purchase cost. An SIP can be weekly, monthly, quarterly, etc. In your case, just imagine that you are investing through a quarterly SIP.

Every investor dreams of buying low and selling high to maximise returns. However, it is not an easy strategy to follow. For example, you never know when the market has hit a low. It can plunge further after you buy. Or it can go up further after you sold it. Also, NAV of a scheme and stock price are not similar. The NAV is the total value of all investments of a scheme minus expenses. Where as the stock price may be a combination of the fundamentals of the stock and investors expectations from it. So, mistaking the NAV with the stock price could be a costly error.


Countless studies show that the only way to maximise wealth is investing a small sum regularly over a long period. That is the reason why mutual fund industry promotes investing through SIPs.